Between 1985 and 2005, median monthly housing costs increased 128%, from $348 $793, while the percent of median family income spent on housing increased from 19% to 22% over the same period. This is according to a report released by HUD on the trends in housing costs.

The report, Trends in Housing Costs: 1985-2005 and the 30-Percent-of-Income Standard, separates data from the American Housing Survey (AHS), a biennial record of detailed information on around 50,000 housing units, into three categories: all owners with primary mortgages, all owners without primary mortgages, and all renters. In constant 2005 dollars, both groups comprised of owners, with and without mortgages, saw an increase of 25% in housing costs over the 20-year period. Housing costs for renters increased by only 8% in constant dollars over the study period.

The primary component of housing costs for owners with mortgages was payments to principal and interest on all mortgages, accounting for around 65% of all monthly housing costs. The second major component of housing costs for owners with mortgages was utilities. For owners without mortgages, the primary and secondary components of housing costs were utilities and real estate taxes, respectively.

Rental payments, including water and trash services, accounted for 85% of renter housing costs over the period, with utilities accounting only for around 14% of renter housing costs.

The report also focuses on assessing the appropriateness of using the 30% standard in determining the affordability of housing. Since 1981, HUD has used the 30% income standard to ensure that no family living in federally assisted housing has to pay more than 30% of its income on housing.

To assess the current validity of the 30% standard, the authors employ two methods. The first method, apparently proposed by HUD, assumes that the 30% standard was adequate in 1985 and assesses whether households at varying income levels could afford the same level of non-housing consumption in 2005 that they consumed in 1985 if they continue to spend 30% of their incomes on housing. The second method utilizes Bureau of Labor Statistics (BLS) “family budgets” produced in 1981 and updated to 2005 dollars. This method compares the updated cost of the non-housing portion of the BLS budget to the residual left over after current housing costs are paid from today’s income levels.

The first method finds that on average, “regardless of income class, households would be able to purchase more real non-housing goods and services in 2005 than in 1985 if households allocated 30% of their income to housing and 70% to non-housing” (p. 32). In other words, 70% of income buys more non-housing goods today than in 1985. The second method, however, finds that at all income levels households with children spent substantially more on housing than the inflated BLS budget would suggest they should and therefore had proportionately less money available for non-housing essentials.